EX-99.(26)(G)(2) 12 dex9926g2.htm REINSURANCE AGREEMENT SERVICE AGREEMENT AND INDEMNITY COMBINATION COINSURANCE AND MODIFIED COINSURANCE AGREEMENT OF VARIABLE LIFE INSURANCE POLICIES BETWEEN JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) AND JOHN...
SERVICE AGREEMENT
AND
INDEMNITY COMBINATION COINSURANCE
AND MODIFIED COINSURANCE AGREEMENT
OF VARIABLE LIFE INSURANCE POLICIES
BETWEEN
XXXX XXXXXXX LIFE INSURANCE COMPANY (U.S.A.)
AND
XXXX XXXXXXX LIFE INSURANCE COMPANY OF NEW YORK
TREATY #6
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS | 1 | |||
Section 1.01 | Definitions | 1 | ||
ARTICLE 2 PURPOSE OF AGREEMENT | 3 | |||
Section 2.01 | Purpose of Agreement | 3 | ||
ARTICLE 3 COVERAGES TO BE REINSURED | 3 | |||
Section 3.01 | Cession | 3 | ||
Section 3.02 | Modified Coinsurance | 3 | ||
Section 3.03 | Coinsurance | 4 | ||
ARTICLE 4 INDEMNITY REINSURANCE PROVISIONS | 4 | |||
Section 4.01 | Basis of Reinsurance | 4 | ||
Section 4.02 | Annuitizations | 4 | ||
Section 4.03 | Reinstatements | 4 | ||
Section 4.04 | Policy Changes | 4 | ||
Section 4.05 | Conversions | 5 | ||
Section 4.06 | Dividends | 5 | ||
ARTICLE 5 ACCOUNTING, PAYMENTS AND PROCEDURES | 5 | |||
Section 5.01 | Effective Date Accounting | 5 | ||
Section 5.02 | Adjustments | 5 | ||
Section 5.03 | Further Adjustments | 6 | ||
Section 5.04 | No Ceding Allowance | 6 | ||
Section 5.05 | Initial Coinsurance Reinsurance Premium | 6 | ||
Section 5.06 | Initial Modco Reinsurance Premium and Reserve Adjustment | 6 | ||
Section 5.07 | Reserves | 6 | ||
Section 5.08 | Adjustments Relating to Errors and Incorrect Data | 6 | ||
Section 5.09 | DAC Tax Calculations | 6 | ||
Section 5.10 | Premium Tax | 7 | ||
Section 5.11 | Quarterly Accounting and Settlement | 7 | ||
Section 5.12 | Delayed Quarterly Settlement | 8 | ||
ARTICLE 6 SERVICES | 8 | |||
Section 6.01 | Services | 8 | ||
Section 6.02 | Delegation | 9 | ||
Section 6.03 | Complaint Processing | 9 | ||
ARTICLE 7 REGULATORY APPROVALS | 10 | |||
Section 7.01 | Regulatory Approval | 10 |
Section 7.02 | Regulatory Approval Following Amendment | 10 | ||
Section 7.03 | Best Efforts | 10 | ||
Section 7.04 | Filing | 10 | ||
ARTICLE 8 REPRESENTATIONS AND WARRANTIES OF CEDING COMPANY | 10 | |||
Section 8.01 | Authority | 10 | ||
Section 8.02 | Other Representations and Warranties | 11 | ||
ARTICLE 8A REPRESENTATIONS AND WARRANTIES OF REINSURER | 13 | |||
Section 8A.01 | Authority | 13 | ||
Section 8A.02 | Conduct of Business | 15 | ||
ARTICLE 9 RECORDS, FEES AND OWNERSHIP OF PREMIUMS | 15 | |||
Section 9.01 | Records | 15 | ||
Section 9.02 | Fees | 15 | ||
Section 9.03 | Ownership of Premiums | 15 | ||
Section 9.04 | Bank Accounts | 15 | ||
Section 9.05 | Authorizations | 15 | ||
Section 9.06 | Security Agreement | 16 | ||
ARTICLE 10 INDEMNIFICATION | 16 | |||
Section 10.01 | Indemnification of Reinsurer | 16 | ||
Section 10.02 | Indemnification of Ceding Company | 17 | ||
Section 10.03 | Tax Compliance | 18 | ||
ARTICLE 11 CLAIMS INVESTIGATIONS: PUNITIVE DAMAGES | 18 | |||
Section 11.01 | Investigation of Claims: Punitive Damages | 18 | ||
ARTICLE 12 ARBITRATION | 19 | |||
Section 12.01 | Arbitration Clause | 19 | ||
ARTICLE 13 DELIVERIES AS OF THE EFFECTIVE DATE | 19 | |||
Section 13.01 | Deliveries by Ceding Company | 19 | ||
Section 13.02 | Deliveries by Reinsurer | 20 | ||
ARTICLE 14 GENERAL PROVISIONS | 20 | |||
Section 14.01 | Successors, Assigns | 20 | ||
Section 14.02 | Entire Agreement | 20 | ||
Section 14.03 | Non-Waiver of Rights | 20 |
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Section 14.04 | Governing Law | 20 | ||
Section 14.05 | Rights | 21 | ||
Section 14.06 | Counterparts | 21 | ||
Section 14.07 | Correspondence | 21 | ||
Section 14.08 | Duration | 21 | ||
Section 14.09 | Notices | 21 | ||
Section 14.10 | Cooperation | 22 | ||
Section 14.11 | Insolvency | 22 | ||
Section 14.12 | Cut-Through Provision | 22 | ||
Section 14.13 | Audit of Records and Procedures | 22 | ||
Section 14.14 | Termination | 23 | ||
Exhibits and Schedules | ||||
Exhibit A | Description of Reinsured Policies | 25 | ||
Exhibit B | Form of Effective Date Accounting | 26 | ||
Exhibit C | Assets | 27 | ||
Exhibit D | Reinsurance Gain | 28 | ||
Exhibit E | Form of Quarterly Accounting and Settlement Report | 31 | ||
Schedule 8.02(b) Material Litigation and Regulatory Action | 33 | |||
Schedule 8.02(c) List of Reinsurance Agreements | 34 |
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THIS AGREEMENT is made and entered into as of the 1st day of January 2010, between XXXX XXXXXXX LIFE INSURANCE COMPANY (U.S.A.) of Bloomfield Hills, Michigan (herein “Ceding Company”), AND XXXX XXXXXXX LIFE INSURANCE COMPANY OF NEW YORK of Valhalla, New York, (herein “Reinsurer”).
A. Ceding Company is incorporated under the laws of Michigan and is qualified to do business as a capital stock legal reserve life and health insurer. The executive offices of Ceding Company are located in Boston, Massachusetts.
B. Reinsurer is incorporated under the laws of New York, and is qualified to do business as a capital stock legal reserve life and health insurer and as a reinsurer. The executive offices of Reinsurer are located in Valhalla, New York.
C. Following the merger of Xxxx Xxxxxxx Life Insurance Company with and into the Ceding Company (the “Merger”), Ceding Company shall have on its books certain variable life insurance policies which it desires to cede 100% hereunder, and, subject to the terms of this Agreement, and Reinsurer desires to reinsure 100% of such policies.
D. Although Ceding Company will continue to be legally obligated to the contract holders, in accordance with the terms of such contracts, this Agreement is intended to transfer the economic benefits and liability to the Reinsurer.
ARTICLE 1
Definitions
Section 1.01 As used herein, the following terms shall have the following meanings:
“Accounting Period” shall mean the calendar quarter beginning on the Effective Date and ending on March 31, 2010, and each calendar quarter thereafter while this Agreement remains in effect.
“Agreement” shall mean this Service Agreement and Indemnity Combination Coinsurance and Modified Coinsurance Agreement of Variable Life Insurance Policies Between Xxxx Xxxxxxx Life Insurance Company (U.S.A) and Xxxx Xxxxxxx Life Insurance Company of New York and all Exhibits and Schedules hereto, and all amendments entered into in accordance with Section 14.02.
“Annual Statement” shall mean the 2009 Annual Statement of Xxxx Xxxxxxx Life Insurance Company for the year ended December 31, 2009.
“Continuing Producer” shall mean a former appointed insurance producer of the Ceding Company who was authorized to solicit applications for the Reinsured Policies acting as an appointed insurance producer of the Reinsurer after the Effective Date.
“Coinsurance Reserves” shall mean the statutory reserve for the obligations reinsured pursuant to Section 3.03.
“Effective Date” shall mean January 1, 2010.
“Effective Date Accounting” shall have the meaning ascribed to that term in Section 5.01.
“Modified Coinsurance Reserve” shall mean the statutory reserve for the obligations reinsured pursuant to Section 3.02
“Net Coinsurance Reserve” shall have the meaning ascribed to that term in Section 5.01.
“Reinsurance Agreements” shall mean any Reinsurance Agreements to the extent they concern the Reinsured Policies, other than this Agreement. A list of the Reinsurance Agreements is set forth in Schedule 8.02(c) hereto. The cession of the Reinsured Policies hereunder is not intended to alter the reinsurance of any risk under the Reinsured Policies with any reinsurer other than Reinsurer.
“Reinsurance Claims” shall mean policy benefits paid or accrued to policyholders under the Reinsured Policies.
“Reinsured Policies” shall mean the policies described in Exhibit A which is attached hereto and made a part hereof. Notwithstanding anything contrary in this Agreement, Reinsured Policies: a) shall with respect to any group policies, be deemed to include only certificates issued in New York; and b) shall not include any policy for which any applicable Initial Coinsurance Reinsurance Premium described in Section 5.05, Initial Modco Reinsurance Premium described in Section 5.06, or any adjustment thereto as described in Sections 5.02, 5.03 or 5.08, are not actually transferred to Reinsurer.
“Related Agreements” shall mean the agreements providing for the payment of commissions relating to the Reinsured Policies.
“Separate Accounts” shall mean the segregated asset accounts of Ceding Company that were established as Xxxx Xxxxxxx Variable Life Account UV, Xxxx Xxxxxxx Variable Life Account PPM1-R and Xxxx Xxxxxxx Variable Life Account PPM2-K to fund the variable portion of the Reinsured Policies and succeeded to by the Ceding Company in the Merger.
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“Treaty # 11” shall mean the Service Agreement and Indemnity Coinsurance Agreement of Annuity Contracts and Certificates Between Xxxx Xxxxxxx Life Insurance Company (U.S.A) and Xxxx Xxxxxxx Life Insurance Company of New York dated January 1, 2010 and designated as Xxxxxx # 00, and all Exhibits and Schedules thereto, and all amendments entered into in accordance with its terms.
ARTICLE 2
ARTICLE 3
Section 3.01 Cession. Ceding Company agrees to cede, and does cede, as of the Effective Date, (a) all of Ceding Company’s rights and interest in the Reinsured Policies and the Related Agreements to the end that then and thereafter, as between the parties to this Agreement, Ceding Company shall have no liability for the express, written benefits under the Reinsured Policies or the Related Agreements; and (b) all of Ceding Company’s rights and interest in all Reinsurance Agreements to the extent relating to the Reinsured Policies to the end that then and thereafter Ceding Company shall have no liability on account of the Reinsured Policies with respect to such Reinsurance Agreements, except to the extent otherwise specifically set forth herein.
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Agreements after such date (the “Modified Coinsurance Reserve”); and (b) all rights and responsibilities of the Ceding Company under the Reinsurance Agreements to the extent applicable to the Reinsured Policies.
ARTICLE 4
Indemnity Reinsurance Provisions
Section 4.01 Basis of Reinsurance. On and after 12:01 a.m., New York time, on the Effective Date, Ceding Company’s liabilities under the Reinsured Policies shall be reinsured on a one hundred percent (100%) indemnity coinsurance and modified coinsurance basis by Reinsurer.
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Company’s justification for crediting interest rates outside its current crediting rate practice, and seek the Reinsurer’s consent. Such consent shall not be unreasonably withheld. At Reinsurer’s request, Ceding Company shall report its current crediting rates to Reinsurer (through electronic means or otherwise) in such format and at such times as may be mutually agreed for purposes of Reinsurer’s administration and preparation of statutory accounting reports in accordance with Section 6.01.
Section 4.06 Dividends. For purposes of establishing dividends, Ceding Company shall analyze experience data (e.g. mortality and investment experience) for the Reinsured Policies in combination with experience data from participating policies issued outside of New York that are retained by Ceding Company. For greater clarity, Ceding Company shall continue to consider the Reinsured Policies as part of the current dividend factor class(es) as though the Reinsured Policies were fully retained by Ceding Company when determining dividends for the Reinsured Policies. Reinsurer shall provide mortality and investment experience data relating to the Reinsured Policies to Ceding Company on an annual basis or upon Ceding Company’s request.
ARTICLE 5
Accounting, Payments, and Procedures
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market value of those assets on the Effective Date and any differences between the actual fair market value and the estimated fair market value used in calculating the Reinsurance Premium. The revised accounting shall include a revised Exhibit A, which can be in electronic format that includes all the Reinsured Policies as of the Effective Date. Any payments required of either party as a result of the revised accounting and revised asset listing shall be made within ten (10) business days after delivery of the revised accounting in accordance with Exhibit B.
Section 5.08 Adjustments Relating to Errors and Incorrect Data. Each party is entitled to protection against the consequences of material errors with respect to (i) data on the Reinsured Policies and (ii) the Effective Date Accounting. If material errors are discovered in the above described information within three (3) years from the Effective Date the parties will promptly make any needed adjustments in the amounts so transferred.
(a) | The term “party” will refer to either Ceding Company or Reinsurer as appropriate. |
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(b) | The terms used in this Section are defined by reference to United States Treasury Regulation §1.848-2 in effect as of the Effective Date and at all relevant times thereafter. |
(c) | For each taxable year ending on or after the Effective Date, the party with net positive consideration for this Agreement for each taxable year will capitalize specified policy acquisition expenses with respect to this Agreement without regard to the general deductions limitation of §848(c)(l) of the Internal Revenue Code of 1986, as amended, and Treasury Regulations promulgated thereunder. |
(d) | Both parties agree to exchange information pertaining to the amount of net consideration under this Agreement each year to ensure consistency or as otherwise required by the United States Internal Revenue Service. |
(e) | The exchange of information will follow the following procedure: |
By May 1 of each year, Reinsurer will submit a schedule to Ceding Company of its calculation of the net consideration for the preceding taxable year. This schedule of calculations will be accompanied by a statement signed by an officer of Reinsurer stating the amount of net consideration Reinsurer will report in its tax return for the preceding taxable year. To ensure consistency, Ceding Company will utilize this information in determining its net consideration for its preceding taxable year. Ceding Company shall advise Reinsurer if it disagrees with the calculations provided and the parties agree to act in good faith to resolve such differences amicably.
(f) | Both parties agree to attach a schedule to their 2010 Federal Income Tax Return as required by United States Treasury Regulation 1.848-2(g)(8)(ii) and 1.848-2(g)(8)(iii). |
(g) | Both parties warrant that they are U.S. taxpayers as defined by United States Treasury Regulation 1.848-2(h)(2)(ii). |
Reinsurer shall, on a timely basis and in accordance with Section 6.01, provide Ceding Company any information necessary for Ceding Company to make such tax payments.
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Within forty-five (45) days after the end of each Accounting Period, an amount equal to the Reinsurance Gain, as defined in Exhibit D and calculated as shown in Exhibit E, will be settled between the Ceding Company and Reinsurer. Payment shall first be made by way of cash or cash equivalent, where: (i) if the Reinsurance Gain is greater than or equal to zero, the Ceding Company shall pay the Reinsurer, and (ii) if the Reinsurance Gain is less than zero, the Reinsurer shall pay the Ceding Company the absolute value of the amount.
ARTICLE 6
(a) | all normal and necessary service on account of the Reinsured Policies, including but not limited to: |
(i) | underwriting of increases on existing Reinsured Policies; |
(ii) | answering policyholder questions and correspondence; making changes requested by policyholders to the Reinsured Policies and maintaining policy information and other information storage systems and files; |
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(iii) | adjudicating claims and preparing checks or drafts to pay claims, surrender benefits and other contractual benefits in accordance with applicable state and federal law, provided that at the option of Ceding Company, Ceding Company may pay all claims and seek reimbursement from Reinsurer. For greater clarity, it is the intention of the parties that although Reinsurer will provide all Services required to administer the Reinsured Policies after the Effective Date, Ceding Company will initially, at the direction of Reinsurer, pay all claims and will be subsequently reimbursed quarterly (or such shorter period as the parties agree) by Reinsurer in accordance with the Quarterly Settlement provisions in Section 5.11; and |
(iv) | satisfying all policy filing, tax reporting and any other regulatory requirements with respect to the Reinsured Policies. |
(b) | All information with respect to the Reinsured Policies required by Ceding Company to prepare: (i) the quarterly and annual NAIC reports including all schedules thereto, (ii) any monthly, quarterly and annual tax reporting, and (iii) any other information with respect to the Reinsured Policies which may be requested by any regulatory body in any jurisdiction in which the Ceding Company is licensed. |
(c) | In order to permit Ceding Company to satisfy its reporting obligations, Reinsurer agrees to maintain all necessary records in accordance with accepted standards of prudent insurance recordkeeping. |
(d) | All data required for quarterly NAIC reports shall be submitted to Ceding Company no later than the end of the third week of the month following the quarter end. All data required for annual NAIC reporting shall be submitted to the Ceding Company no later than January 31st. |
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If Reinsurer receives any notice from any source (including, but not limited to, a policyholder or regulatory agency) of a lawsuit or other legal or administrative hearing or proceeding being brought against Ceding Company and involving the Reinsured Policies or the threat of any such lawsuit, hearing or proceeding (“Proceeding”), for which Reinsurer is entitled to indemnification by Ceding Company, Reinsurer will promptly forward to Ceding Company notice of the Proceeding and a copy of all legal documents, correspondence and other materials relevant thereto which Reinsurer reasonably has access to as required by Article 9 hereof, provided, however, that failure to give such notice shall not affect Ceding Company’s obligations to indemnify Reinsurer unless such failure materially prejudices Ceding Company’s rights with respect to such Proceeding. Reinsurer agrees to cooperate fully with Ceding Company in connection with the Proceeding.
ARTICLE 7
ARTICLE 8
Representations and Warranties of Ceding Company
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Company or its predecessor in interest was licensed or otherwise authorized in New York to issue the Reinsured Policies. Ceding Company has the full corporate power and authority to carry out and perform its undertakings and obligations under this Agreement. Except as provided in Article 7, the execution and delivery by Ceding Company of this Agreement and the consummation by Ceding Company of the transactions contemplated in this Agreement have been duly authorized by all proper and requisite proceedings and will not conflict with, constitute a default under or breach any provision of the Articles of Incorporation or Bylaws of Ceding Company, or any material provision of any other instrument to which Ceding Company is a party or by which it is bound, or any law, rule or regulation of any governmental body applicable to Ceding Company or any order, writ, injunction or decree of any court or governmental body directed against Ceding Company. This Agreement has been duly and validly executed and delivered by Ceding Company. Assuming due authorization, execution and delivery by Reinsurer, this Agreement is the legal, valid and binding obligation of Ceding Company enforceable against it in accordance with its terms.
(c) | Reinsurance Agreements. Schedule 8.02(c) sets forth a complete and accurate listing and description of all Reinsurance Agreements, Ceding Company has duly and punctually performed all the terms, conditions, covenants, and warranties of the Reinsurance Agreements. To the best of Ceding Company’s knowledge, the other parties to such Reinsurance Agreements are not in default under any of the terms thereof. |
(d) |
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upon such assets being transferred to Reinsurer in accordance with the terms hereof. Ceding Company agrees to indemnify and save harmless Reinsurer against and from any and all claims or liens against said assets or any claim or judgment which may be made or entered against or related to said assets or any claim or judgment which may be made or entered against Reinsurer for which the latter is not expressly obligated under this Agreement. |
(f) | Correct Information. All of the information concerning the Reinsured Policies contained in Exhibit A, or any other exhibits to this Agreement, is true and correct in all material respects. |
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ARTICLE 8A
Representations and Warranties of Reinsurer
Reinsurer represents and warrants that:
When collateralizing by a letter of credit, the Reinsurer agrees to arrange for the timely delivery of a clean, unconditional and irrevocable letter of credit for the exclusive benefit of Ceding Company, issued in a form acceptable to the insurance regulatory authorities having jurisdiction over Ceding Company’s reserves. The letter of credit (the “Letter of Credit”) will be issued by a bank that is neither the parent, subsidiary or affiliate of either Reinsurer or Ceding Company and is (1) organized or licensed in the United States, (2) regulated, supervised and examined by U.S. federal or state authorities, and (3) and has been found acceptable to Ceding Company.
For every Accounting Period in which a Letter of Credit is to be provided under this Section, the amount of the Letter of Credit will equal or exceed, at all times, the Coinsurance Reserves.
Not less than ten (10) days prior to the end of each Accounting Period, Ceding Company shall estimate such Coinsurance Reserves and the amount of any Letter of Credit required in
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accordance with this Section and notify Reinsurer of the amount of the Letter of Credit required in accordance with this Section and prior to the close of the Accounting Period in which such notice is received, Reinsurer shall obtain and deliver to Ceding Company a Letter of Credit, or an amendment to a Letter of Credit, in an amount not less than the aforementioned estimated amount.
Reinsurer further agrees that upon completion of any Accounting Period reporting, if the Letter of Credit amount as based upon the aforementioned estimate is less than the actual amount of the Letter of Credit provided under this Section, Reinsurer shall obtain and provide to Ceding Company such other Letter of Credit, or amendment to Letter of Credit, in such amount as needed to meet the requirements of this Section.
Ceding Company agrees that upon completion of any Accounting Period reporting, if the actual amount of the Letter of Credit provided by Reinsurer under this Section is in excess of the Letter of Credit amount as based upon the aforementioned estimate, Ceding Company shall promptly, upon receipt of Reinsurer’s written request, agree to an amendment reducing the amount of the Letter of Credit by an amount equal to such excess.
Notwithstanding anything to the contrary in this Agreement, Reinsurer and Ceding Company agree that the Letter of Credit may be drawn on by Ceding Company at any time and will be utilized and applied by Ceding Company, including, without limitation, any liquidator, rehabilitator, receiver or conservator of Ceding Company, without diminution because of the insolvency on the part of Ceding Company or Reinsurer, only for the following purposes:
(a) | To reimburse Ceding Company for Reinsurer’s share of benefit payments or losses paid by Ceding Company pursuant to the provisions of policies reinsured under this Agreement, the payment of which is due under the terms of this Agreement and which has not otherwise been paid; |
(b) | In the event Ceding Company receives notice that the Letter of Credit will not be renewed and on the thirtieth (30th) day following the date of such notice Reinsurer has not established a replacement Letter of Credit or alternative security device suitable to qualify Ceding Company for reserve credit for the reinsurance hereunder, then Ceding Company or its statutory successor may draw upon the Letter of Credit to fund an amount with Ceding Company for Reinsurer’s obligations which are properly attributable to the Reinsured Policies reinsured under this Agreement. Such amount will include, but not be limited to, amounts for policy reserves, reserves for claims and losses incurred, loss adjustment expenses and unearned premiums. The amount drawn on the Letter of Credit shall be held in trust in an interest bearing account separate from Ceding Company’s other assets and interest thereon shall accrue to the benefit of Reinsurer, and; |
(c) | To pay any other obligations of Ceding Company that are in fact due from Reinsurer under this Agreement, the payment of which is due under the terms of this Agreement and which has not otherwise been paid. |
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In the event that the amount drawn by Ceding Company on the Letter of Credit exceeds the actual amount required for items (a), (b) and/or (c) above, or in the case of a draw pursuant to (c) above, Ceding Company shall promptly return to Reinsurer the excess amounts so drawn, together with interest thereon. All the foregoing shall be applied without diminution because of insolvency on the part of Ceding Company or Reinsurer.
ARTICLE 9
Records, Fees, and Ownership of Premiums
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administration, agent compensation, and claim matters. Notwithstanding the failure of Ceding Company to grant specific authorizations, Reinsurer shall be authorized hereunder to perform such acts with respect to the Reinsured Policies and the Related Agreements.
ARTICLE 10
(a) | any and all unpaid liabilities occurring prior to the Effective Date other than those express, written contractual liabilities set forth in the Reinsured Policies and the express, written contractual liabilities in the Related Agreements; |
(b) | any misrepresentation or breach of any covenant or warranty made by Ceding Company (or matter treated as a covenant or warranty made by Ceding Company) in this Agreement or the matters that are the subject of any such misrepresentation or breach (notwithstanding Ceding Company’s knowledge of such matter, misrepresentation or breach); |
(c) | any acts or omissions by or on behalf of Ceding Company, its agents or employees, occurring prior to the Effective Date; |
(d) | any acts or omissions committed by agents (including former agents) of Ceding Company that occur before the Effective Date. |
In the event of a misrepresentation or breach of warranty under Section 10.03 of this Agreement it is agreed that Ceding Company will to the extent reasonable pursue administrative relief with the Internal Revenue Service to correct, both prospectively and retroactively, any violation under Section 7702 of the Internal Revenue Code, at the sole expense of Ceding Company.
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Ceding Company will assume the defense of any lawsuits that may be brought against Reinsurer that relate to the matters for which Ceding Company herein agrees to indemnify Reinsurer.
Reinsurer shall give written notice to Ceding Company of any indemnity claims within thirty (30) days after Reinsurer has actual notice of such claim, and in the event a suit or other proceeding is commenced, within ten (10) days after receipt of notice to Reinsurer; provided, however that failure to give such notice shall not affect Ceding Company’s obligations to indemnify unless such failure materially prejudices Ceding Company’s rights with respect to defending such claim. Reinsurer and Ceding Company shall cooperate in reasonable requests for documents, testimony and other forms of assistance in connection with an indemnity claim.
(a) | any misrepresentation or breach of any covenant or warranty made by the Reinsurer in this Agreement or the matters that are the subject of such misrepresentation or breach; |
(b) | any liability, other than liabilities arising out of Ceding Company’s actions, resulting from the maintenance or operation of bank accounts created pursuant to Section 9.04; |
(c) | any acts or omissions by or on behalf of Reinsurer, its agents or employees, occurring entirely after the Effective Date (provided that such actions were not taken based on the books and records transferred hereunder); |
(d) | any acts or omissions committed by appointed agents of the Reinsurer in servicing the Reinsured Policies occurring after the Effective Date, but excluding acts of concealment of wrongdoing by Ceding Company or its agents that occurred prior to the Effective Date; |
(e) | any fines or penalties imposed on Ceding Company solely as a result of the activities of Reinsurer, its agents or employees; and/or |
(f) | any acts or omissions committed by former agents of Ceding Company with respect to the Reinsured Policies occurring after the Effective Date (but excluding acts of concealment of wrongdoing by its former agents that occurred prior to the Effective Date or acts undertaken under apparent or actual authority arising independent of the Reinsured Policies). |
Reinsurer will assume the defense of any lawsuits that may be brought against Ceding Company that relate to the matters for which Reinsurer agrees to indemnify Ceding Company.
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Ceding Company shall give written notice to Reinsurer of any indemnity claims within thirty (30) days after Ceding Company has actual notice of such claim, and in the event a suit or other proceeding is commenced, within ten (10) days after receipt of notice to Ceding Company; provided, however that failure to give such notice shall not affect Reinsurer’s obligations to indemnify unless such failure materially prejudices Reinsurer’s rights with respect to defending such claim. Reinsurer and Ceding Company shall cooperate in reasonable requests for documents, testimony and other forms of assistance in connection with an indemnity claim
ARTICLE 11
Claims Investigations: Punitive Damages
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contained herein are not intended to, and shall not be construed to, impose liability on any party hereto vis-a-vis third parties.
ARTICLE 12
ARTICLE 13
Deliveries as of the Effective Date
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re-registration of such instruments (or of any additional instruments as may be necessary in connection with adjustments described in Sections 5.02 and 5.03), and Reinsurer will bear any risks associated with such reregistration.
ARTICLE 14
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(1) Reinsurer: | Xxxx Xxxxxxx Life Insurance Company of New York | |
000 Xxxxxx Xxxx Xxxxx Xxxxx | ||
Xxxxxxxx, XX 00000 | ||
Attention: President | ||
With Copy To: | Xxxx Xxxxxxx Life Insurance Company (U.S.A.) | |
000 Xxxxxxxx Xxxxxx | ||
Xxxxxx, XX 00000 | ||
Attention: General Manager, | ||
Xxxx Xxxxxxx Life Insurance | ||
(2) Ceding Company: | Xxxx Xxxxxxx Life Insurance Company | |
(U.S.A.)601 Xxxxxxxx Xxxxxx | ||
Xxxxxx, XX 00000 | ||
Attention: Corporate Secretary |
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With Copy To: | Xxxx Xxxxxxx Life Insurance Company (U.S.A.) | |
000 Xxxxxxxx Xxxxxx | ||
Xxxxxx, XX 00000 | ||
Attention: General Manager, | ||
Xxxx Xxxxxxx Life Insurance |
Or such other address as shall be furnished in writing by the parties to the other.
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In conjunction with any examination of Ceding Company by the Insurance Department (or any other regulatory body) of any jurisdiction in which Ceding Company is licensed, Reinsurer shall permit an examination of its books and records relating to the Reinsured Policies.
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XXXX XXXXXXX LIFE INSURANCE COMPANY (U.S.A.) | XXXX XXXXXXX LIFE INSURANCE COMPANY OF NEW YORK | |||||||
By: | /s/ Xxxxxx Xxxxx | By: | /s/ Xxxxx X. Xxxxxxxxx | |||||
Name | Xxxxxx Xxxxx | Name | Xxxxx X. Xxxxxxxxx | |||||
Title: | Executive Vice President | Title: | President | |||||
Date: | 12-16-09 | Date: | 12-16-09 |
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Exhibit A
DESCRIPTION OF REINSURED POLICIES
Reinsured Policies as used in this Agreement refers to the variable life insurance policies issued in New York by Xxxx Xxxxxxx Life Insurance Company, which policies are in force as of the Effective Date, as well as any riders providing for other supplemental benefits and specifically includes: (a) all lapsed policies subject to reinstatement and (b) any supplemental benefits (including policies issued pursuant to conversion privileges) arising out of the Reinsured Policies. Reinsured Policies shall not include the obligations resulting from the contractual right under the Reinsured Policies, if any, to annuitize cash value, surrender or death benefits under such policies, as these obligations will be covered under Treaty # 11 between Ceding Company and Reinsurer.
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Exhibit B
Form of Effective Date Accounting
Form of Accounting:
Reserves | |||||
1 | Gross Formula Reserves on NY Basis | 94,000,000 | |||
2 | Ceded Reserves (including modco) | (2,000,000 | ) | ||
3 | Additional reserves needed | ||||
4 | Actuarial reserves net of reinsurance | 92,000,000 | |||
Other Liabilities | |||||
5 | Policyholders’ and beneficiaries’ funds | 1,000,000 | |||
6 | Policy benefits in process of payment | 3,000,000 | |||
7 | Other policy obligations | 2,000,000 | |||
8 | Interest maintenance reserve | 0 | |||
9 | Obligations related to separate accounts | ||||
10 | Other Liabilities | 6,000,000 | |||
11 | Net Coinsurance Reserves (4+10) | 98,000,000 | |||
Modified Coinsurance Reserve | 755,000,000 | ||||
The Net Coinsurance Reserve shown constitutes the Initial Coinsurance Reinsurance Premium pursuant to Section 5.05, and the Modified Coinsurance Reserve shown constitutes the Initial Modco Reinsurance Premium and Reserve Adjustment pursuant to Section 5.06.
In the event adjustments are made under Section 5:02 or Section 5:03, the amount owed will be increased with interest for the time elapsed between the Effective Date and the date of payment. The annual interest rate to be used will be the yield on 3 month US Treasury Bills, as published by the U.S Treasury, on the last business day of the quarter ending on or immediately prior to the date of any revised accounting.
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Exhibit C
List of Transferred Assets
Assets Permitted in Lieu of Cash under Article 5
The list of transferred assets shall contain a seriatim listing of all assets transferred by the Ceding Company and be provided to the Reinsurer upon request.
Asset Summary
Marketable Securities | ||||
1 | Bonds - Public | 64,043,529 | ||
2 | Bonds - Private | |||
3 | Preferred stocks | |||
4 | Equity - Public | |||
5 | Equity - Private | |||
6 | Commercial Mortgages | |||
7 | Commercial Real Estate | |||
8 | Agriculture | |||
9 | Timber | |||
10 | Derivatives | |||
11 | Other invested assets | |||
12 | Investment Income Due & Accrued | 928,352 | ||
13 | Cash and short-term investments | 28,119 | ||
14 | Total marketable securities | 65,000,000 | ||
Other Assets | ||||
15 | Policy Loans | 31,000,000 | ||
16 | Premiums due and deferred | 2,000,000 | ||
17 | Assets held in separate accounts | 0 | ||
18 | Funds Withheld | |||
19 | Total Other Assets | 33,000,000 | ||
20 | Total Assets (14+19) | 98,000,000 | ||
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Exhibit D
For each Accounting Period as defined in Section 1.01, the reinsurance gain (the “Reinsurance Gain”) will be equal to (1) plus (2), minus (3), plus (4), plus (5), minus (6), minus (7) where:
(1) | Equals the Reinsurance Premiums as determined in accordance with Section B. of this Exhibit D. |
(2) | Equals the Net Reinsurance Fees as determined in accordance with Section C. of this Exhibit D. |
(3) | Equals the Reinsurance Claims as determined in accordance with Section D. of this Exhibit D. |
(4) | Equals the Net Transfers as determined in accordance with Section E. of this Exhibit D. |
(5) | Equals the Separate Account Modco Investment Credit as determined in accordance with Section F. of this Exhibit D. |
(6) | Equals the Modco Reserve Adjustment as determined in accordance with Section G. of this Exhibit D. |
(7) | Equals the Commission Allowance as determined in accordance with Section H. of this Exhibit D. |
For the avoidance of doubt, each of the amounts determined above, including the Reinsurance Gain, may be a positive or a negative number.
B. Reinsurance Premiums
For each Accounting Period, Reinsurance Premiums is the amount of all premiums collected under the Reinsured Policies.
For each Accounting Period, Net Reinsurance Fees is the amount paid or payable by Ceding Company to reflect all fees charged by the Ceding Company on the Reinsured Policies, including the net investment management fees charged by any advisor controlled by Ceding Company on underlying fund assets of the Reinsured Policies (but not including any sub-advisory fees paid on such underlying fund assets), insurance fees, and rider fees, less any trail commission expense. For the purposes of this Agreement, the amount payable for Net Reinsurance Fees for each Accounting Period will be the actual fees as basis points, or such other rate as may be agreed between the parties from time to time, times the average of the beginning fund value of the respective Separate Account for the Reinsured Policies and the ending fund value of the respective Separate Account for the Reinsured Policies. For the avoidance of doubt, the Reinsurance Fees calculated by this method for any Accounting Period can never be in excess of
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the net investment management fees, insurance fees, and rider fees actually earned less trail commissions paid by the Ceding Company on the Reinsured Policies.
For each Accounting Period, Reinsurance Claims includes all benefits paid or accrued under the Reinsured Policies. For these purposes, benefits paid or accrued under the Reinsured Policies include, but are not limited to:
(iii) | Other Benefits. Other Benefits is the total amount paid or accrued for rider or other benefits payable under the Reinsured Policy. |
E. Net Transfers to (from) Separate Accounts
For each Accounting Period, Net Transfers to/from Separate Accounts is the net amount of all fund transfers initiated by owners of the Reinsured Policies between the Separate Accounts and the general account as well as transfers required to pay any policy charges. Net Transfers from the Separate Accounts to the general account are to be reflected as a positive amount in the “General Account (Coinsurance)” column on Exhibit E. Conversely, Net Transfers to the Separate Accounts from the general account are to be reflected as positive amount in the “Separate Accounts (Modco)” column on Exhibit E.
F. Separate Account Modco Investment Credit
For each Accounting Period, the Separate Account Modco Investment Credit is equal to the sum of all accrued investment income and capital gains and losses, realized and unrealized, on the Ceding Company’s Separate Accounts shown on Exhibit A, which has been credited to (or deducted from) the Reinsured Policies during the Accounting Period. The Separate Account Modco Investment Credit is net of the amount of any fees deducted by underlying funds used with the Reinsured Policies.
It is the intent of the parties that the Separate Account Modco Investment Credit shall be adjusted to reflect gains or losses to the Separate Accounts during the Accounting Period resulting from Reinsurer’s errors in providing services described in Article 6.
For each Accounting Period, the Modco Reserve Adjustment shall be (1) minus (2) minus (3), where,
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(1) Equals a modified coinsurance reserve (the “Modco Reserve”) held by the Ceding Company at the end of the Accounting Period. For these purposes, the Modco Reserve equals the amounts shown on Ceding Company’s statutory statements at the end of the Accounting Period for its Separate Account liabilities related to the Reinsured Policies, including pending claim reserves. Ceding Company may, for purposes of determining Reinsurance Gain, exclude immaterial reserve amounts determined under the then applicable Commissioners Annuity Reserve Valuation Method (CARVM); and
(2) Equals the Modco Reserve, determined in accordance with subsection (1), at the end of the previous Accounting Period, except that for the initial Accounting Period, the Modco Reserve will equal the Modified Coinsurance Reserve determined as of the Effective Date, in accordance with Sections 5.01, 5.02 and 5.03 and Exhibit B of the Agreement.
(3) Equals the Modco Investment Credit as per item F
H. Commission Allowance
For each Accounting Period, the Commission Allowance equals the total amount of commission paid to distributors of the Reinsured Policies to reflect the receipt of premiums on the Policies.
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Exhibit E
Form of Quarterly Accounting and Settlement Report
Accounting Period:
Calendar Year:
Date Report Completed:
Reinsurance Gain/Loss
General Account (Coinsurance) | Separate Accounts (Modco) | |||
1. Reinsurance Premiums | ||||
2. Net Reinsurance Loads & Charges | ||||
3. Reinsurance Claims [a + b + c] | ||||
a. Death Claims (i + ii) | ||||
i. Account Value | ||||
ii. Death Benefit in Excess of Account Value | ||||
b. Withdrawals and Surrenders (i - ii) | ||||
i. Account Value | ||||
ii. Withdrawal Charges | ||||
c. Other Benefits | ||||
4. Net Transfers to/from Separate Accounts | ||||
5. Modco Reserve Adjustment | ||||
6. Commission Allowance | ||||
REINSURANCE GAIN (1 + 2 - 3 + 4 - 5 - 6 ) |
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Exhibit E (continued)
Form of Quarterly Accounting and Settlement Report
CASH SETTLEMENT
Cash Settlement on a quarterly basis shall equal the Reinsurance Gain/Loss as defined above adjusted as follows:
+ Reinsurance Gain/Loss
- Reinsurance Premiums Accrued
+ Death Claims Accrued
+ Withdrawal Benefits Accrued
+ Other Benefits Accrued
= Reinsurance Cash Settlement
NUMBER OF REINSURED POLICIES
Beginning Balance
Terminations
Ending Balance
General Account | Separate Account | |||
ACCOUNT VALUE ROLL FORWARD | ||||
Beginning Balance | ||||
Premiums/Deposits | ||||
Loads & Charges | ||||
Loan Activity | ||||
Transfers | ||||
Withdrawals | ||||
Deaths | ||||
Surrenders | ||||
Charges | ||||
Net Interest Credited | NA | |||
SA Net Investment Income & Fees | NA | |||
Ending Balance |
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Schedule 8.02(b)
Material Litigation and Regulatory Action
None
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Schedule 8.02(c)
List of Reinsurance Agreements
Note: Only the portion of the Reinsurance Agreements that relates to the Coinsured Policies will be transferred.
Reinsurer | Reins Type | Effective Date | ||
AXA CORPORATE SOLUTIONS | YRT | 01/01/2001 | ||
CANADA LIFE INSURANCE CO. | Coinsurance | 10/11/2002 | ||
SWISS RE LIFE & HEALTH (CIGNA) | YRT | 07/01/1985 | ||
MUNICH AMERICAN REASSURANCE CO. (CNA) | YRT | 01/01/2000 | ||
EMPLOYERS REASSURANCE CORP.(KC) | YRT | 01/01/2000 | ||
EMPLOYERS REASSURANCE CORP.(KC) | Coinsurance | 01/01/2001 | ||
EMPLOYERS REASSURANCE CORP.(KC) | YRT | 06/21/2003 | ||
GENERAL RE LIFE CORPORATION | YRT | 01/01/1981 | ||
GENERAL RE LIFE CORPORATION | Coinsurance | 02/01/1995 | ||
GENERAL RE LIFE CORPORATION | YRT | 01/01/2000 | ||
GENERAL RE LIFE CORPORATION | YRT | 04/28/2004 | ||
GENERAL RE LIFE CORPORATION | YRT | 03/01/2004 | ||
GENERALI USA LIFE REASSURANCE CO. | YRT | 01/01/2005 | ||
IDEALIFE INSURANCE COMPANY | YRT | 01/01/2000 | ||
SWISS RE LIFE & HEALTH (LR) | Coinsurance | 02/01/1995 | ||
SWISS RE LIFE & HEALTH (LR) | Coinsurance | 01/01/2001 | ||
LINCOLN NATIONAL LIFE INSURANCE CO. | Coinsurance | 02/01/1995 | ||
LINCOLN NATIONAL LIFE INSURANCE CO. | YRT | 01/01/2000 | ||
LINCOLN NATIONAL RE CO (BARBADOS) LTD | YRT | 01/01/2000 | ||
M LIFE INSURANCE CO. | YRT | 01/01/1992 | ||
M LIFE INSURANCE CO. | Modco | 01/01/2004 | ||
MUNICH AMERICAN REASSURANCE CO. | Coinsurance | 01/01/2001 | ||
MUNICH AMERICAN REASSURANCE CO. | Coinsurance | 10/11/2002 | ||
MUNICH AMERICAN REASSURANCE CO. | YRT | 01/01/2005 | ||
OPTIMUM RE. INSURANCE CO. | YRT | 01/01/2005 | ||
RGA AMERICAS RE. CO. LTD (BARBADOS) | YRT | 01/01/2000 | ||
RGA REINSURANCE CO. | YRT | 01/01/1984 | ||
RGA REINSURANCE CO. | YRT | 08/01/1991 | ||
RGA REINSURANCE CO. | YRT | 10/01/1995 | ||
RGA REINSURANCE CO. | YRT | 01/01/2000 | ||
RGA REINSURANCE CO. | YRT | 08/15/2002 | ||
RGA REINSURANCE CO. | YRT | 06/21/2003 | ||
RGA REINSURANCE CO. | YRT | 04/28/2004 | ||
RGA REINSURANCE CO. | Coinsurance | 02/01/1995 | ||
SCOR LIFE RE | YRT | 01/01/2001 | ||
SCOTTISH RE LIFE CORP (PHOENIX) | YRT | 06/01/1997 | ||
SCOTTISH RE. (USA) INC. | Coinsurance | 01/01/2001 | ||
SCOTTISH RE. (USA) INC. | Coinsurance | 10/11/2002 |
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Reinsurer | Reins Type | Effective Date | ||
SECURITY LIFE OF DENVER | YRT | 08/15/2002 | ||
SECURITY LIFE OF DENVER | Coinsurance | 10/11/2002 | ||
SECURITY LIFE OF DENVER | YRT | 06/21/2003 | ||
SECURITY LIFE OF DENVER | YRT | 04/28/2004 | ||
LINCOLN NATIONAL LIFE INSURANCE CO. | Coinsurance | 01/01/2001 | ||
TRANSAMERICA FINANCIAL LIFE INSURANCE COMPANY | Coinsurance | 02/01/1995 | ||
TRANSAMERICA FINANCIAL LIFE INSURANCE COMPANY | Coinsurance | 01/01/2001 | ||
TRANSAMERICA FINANCIAL LIFE INSURANCE COMPANY | Coinsurance | 10/11/2002 | ||
TRANSAMERICA FINANCIAL LIFE INSURANCE COMPANY | YRT | 06/21/2003 | ||
TRANSAMERICA FINANCIAL LIFE INSURANCE COMPANY | YRT | 04/28/2004 | ||
TRANSAMERICA FINANCIAL LIFE INSURANCE COMPANY | YRT | 01/01/2005 | ||
WILTON REASSURANCE BERMUDA LTD. | YRT | 01/01/2000 | ||
WILTON REASSURANCE COMPANY | YRT | 01/01/2000 |
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